How to Be a Charitable Cheapskate

It’s the kind of news story that makes national headlines every year or two: A person of seemingly modest means secretly amasses a small (or not so small) fortune while leading a frugal lifestyle, only to reveal that wealth by giving it all away to charity.

The latest jaw-dropper came from 98-year-old Jack MacDonald of Washington state. He died in September and left a surprise fortune of $187.5 million to Seattle Children’s Research Institute, the University of Washington School of Law and the Salvation Army.

Not bad for a guy who lived in a modest one-bedroom apartment, rode the bus instead of owning a car, faithfully clipped coupons and was known for wearing shirts that were more than a little threadbare. Following his death, his stepdaughter was quoted as saying, “He was quirky and eccentric in many ways, and always stayed true to himself by acting on his convictions to do the most good with his wealth.”

While the number of decimal points in MacDonald’s generous bequest is truly remarkable, what I’ve found is that charitable giving among frugal folks is more common than you might think.

In a 2009 survey I conducted of 320 proud, self-proclaimed “cheapskates” for my bookThe Cheapskate Next Door: The Surprising Secrets of Americans Living Happily Below Their Means, I found that on an annual basis, these cheapskates gave more than twice as much to charity as the average American. I also found that nearly 40 percent of them planned to donate a majority of their estates to charity upon their death. As one of the survey respondents put it, “I believe in spending less on myself so that I have more – both more time and more treasure – to share with those who truly need it.”

You may be surprised by the generosity of many of us frugal folks, but you probably won’t be surprised to learn that we approach charitable giving in the same way we approach all money matters: We want to get the absolute best value for our money.

Here are some tips to get the most bang for your charitable buck:

Due diligence. It’s easy to be attracted to a charitable cause based on a tear-jerking ad. Before you donate, check out the specific charitable organization on websites like CharityNavigator.org and Guidestar.org. They’ll give you the lowdown on how wisely individual charities spend their money, and can help you find a charity that best matches your interests.

Get involved. If you’re inclined to donate funds to a local organization, volunteer some of your time with the group before writing a check. Firsthand experience with a nonprofit organization gives you a unique perspective on how a group functions and what its needs truly are, financial and otherwise.

Matching gifts. Many employers offer to match employee charitable donations to qualified nonprofit groups. Check if your employer has a such program, and if not, encourage it to start one. Some charities will also have a sponsor that’s agreed to match donations from individual donors like you, usually for a limited time. You can even challenge your friends and family to match your donations to a charity that you all support.

Autopilot option. One of the most common practices among the “charitable cheapskates” I surveyed was that they made arrangements with charities to automatically withdraw monthly donations from their checking or savings accounts. This is easier and less painful than making a single large donation each year. It also allows the charity greater certainty in knowing what donations it can expect going forward. If you can’t afford to give a hefty donation this holiday season, consider setting up such a system.

Donate to declutter. If you’re not in a position to donate cash to a charity this holiday season, consider giving household items, furniture and clothing to local thrift stores and other charities. Particularly at this time of year, thrift stores often run low on merchandise due to the demand from holiday shoppers.

Consult the tax man. Charitable giving is the right thing to do and it can also come with some pretty sweet tax benefits. Generally, donations of cash and property to qualified nonprofit organizations are tax-deductible, at least up to a certain amount. Consult a tax professional and IRS Publication 526 regarding your individual financial situation. And remember, donations should be made no later than Dec. 31 of the year in which the deduction is claimed.